Trump doubles tariffs on Canadian steel and aluminium as trade war intensifies

US President Donald Trump said he would double his planned tariffs on steel and aluminium from 25% to 50% for Canada, a retaliation that prompted the provincial government of Ontario to back down on its planned surcharges on electricity sold to the United States.

Mr Trump said the increase in the tariffs set to take effect on Wednesday is a response to the price rises the provincial government of Ontario put on electricity sold to the United States.

He posted on his social media platform Truth Social on Tuesday: “I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50%, on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANADA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORLD.”

The US stock market promptly fell following the post.

“He has to bounce it off the president but I’m pretty confident he will pull back,” Mr Ford said on Mr Trump’s steel and aluminium tariff threat.

“By no means are we just going to roll over. What we are going to do is have a constructive conversation.”

Mr Trump told reporters that he is looking at returning the steel and aluminium tariffs on Canada to 25% and would “probably” do so.

Asked if the United States could face a recession, Mr Trump said: “I don’t see it.”

Wall Street’s sell-off continued to spiral on Tuesday, briefly pulling the stock market 10% below its record set just a few weeks ago.

The S&P 500 was down 1.4% in afternoon trading.

The Dow Jones Industrial Average was down 678 points, or 1.6%, as of 1.40pm Eastern time, and the Nasdaq composite was 1% lower.

The S&P 500 was sitting at the edge of what Wall Street calls a “correction”, where it falls 10%, and was sitting within 0.1 percentage points of the mark.

Mr Trump has given a variety of explanations for his antagonism of Canada, saying his separate 25% tariffs are about fentanyl smuggling and voicing objections to Canada putting high taxes on dairy imports that penalise US farmers.

But he continues to call for Canada to become part of the United States as a solution, a form of taunting that has infuriated Canadian leaders.

“The only thing that makes sense is for Canada to become our cherished Fifty First State,” he posted on Tuesday. “This would make all Tariffs, and everything else, totally disappear.”

The US stock market fell following the post, triggering more concerns after a brutal sell-off on Monday that puts the president under pressure to show he has a legitimate plan to grow the economy instead of perhaps pushing it into a recession.

Mr Trump was set to deliver an address on Tuesday afternoon to the Business Roundtable, a trade association of chief executives that, during the 2024 campaign, he wooed with the promise of lower corporate tax rates for domestic manufacturers.

But his tariffs on Canada, Mexico, China, steel, aluminium – with plans for more to possibly come on Europe, Brazil, South Korea, pharmaceutical drugs, copper, lumber and computer chips – would amount to a massive tax increase.

The stock market’s vote of no confidence over the past two weeks gives the president a dilemma between his enthusiasm for taxing imports and his brand as a politician who understands business based on his own experiences in real estate, media and marketing.

Harvard University economist Larry Summers, a former treasury secretary for the Clinton administration, on Monday put the odds of a recession at 50-50.

Investment bank Goldman Sachs revised down its growth forecast for this year to 1.7% from 2.2% previously. It modestly increased its recession probability to 20% “because the White House has the option to pull back policy changes if downside risks begin to look more serious”.

Mr Trump has tried to reassure the public that his tariffs will cause a bit of a “transition” to the economy, with the taxes spurring more companies to begin the years-long process of relocating factories to the United States to avoid the tariffs. But he set off alarm bells in an interview broadcast on Sunday in which he did not rule out a possible recession.

“I hate to predict things like that,” he said on Fox News Channel’s Sunday Morning Futures.

The promise of great things ahead did not eliminate anxiety, with the S&P 500 stock index tumbling 2.7% on Monday in an unmistakable Trump slump that has erased the market gains that greeted his victory in November 2024. The S&P 500 index fell roughly 0.4% in Tuesday morning trading.

After the markets closed on Monday, the White House highlighted that the tariffs were prompting companies such as Honda, Volkswagen and Volvo to consider new investments in US factories.

It issued a statement saying Mr Trump’s combination of tariffs, deregulations and increased energy production has led industry leaders to promise to “create thousands of new jobs”.

The significance of thousands of additional jobs was unclear, because the US economy added 2.2 million jobs last year alone, according to the Bureau of Labour Statistics.

Later on Tuesday incoming Canadian Prime Minister Mark Carney has said his government will keep tariffs in place until Americans show respect and commit to free trade after US President Donald Trump threatened historic financial devastation for Canada.

Mr Carney, who will be sworn in as Justin Trudeau’s replacement in the coming days, said Mr Trump’s latest tariffs are an attack on Canadian workers, families, and businesses.